Class Actions: Gambling On A Novel Cause Of Action May Not Be A Winner

In Atlantic Lottery Corp. Inc. v Babstock, 2020 SCC 19 (Babstock), the Supreme Court of Canada (SCC) clarifies the contentious doctrine of "waiver of tort" and provides helpful guidance on the way courts should assess novel claims at the stage of certification of a proposed class proceeding or on a motion to strike a statement of claim.

Key Takeaways

• "Waiver of tort" or "disgorgement for wrongdoing" as an independent cause of action. Disgorgement for wrongdoing is a claim for all the profits made by the defendant as a result of its wrongful conduct. By finding that disgorgement for wrongdoing is not an independent cause of action, the SCC requires plaintiffs claiming a disgorgement remedy for negligence to plead that they have suffered actual loss or injury caused by the defendant.